Financial fiction review: ‘Margin Call’

Margin Call

Great financial fiction movie.

In the the world of finance, traders can trade “on margin”, which (in VERY simplified terms) means they can trade more than they have… this is called “leverage”. Trading on margin is completely legal and potentially very profitable. However, if the traders are unsuccessful, they can take big losses. To help avoid big losses, traders will get a “margin call” from their brokers telling them that they have to clear things up right away.

In the movie Margin Call, one investment bank learns that it has over-leveraged itself with mortgage-backed securities and they make the bold and risky step to sell their securities even if it means causing catastrophic losses to the market and to their customers. This movie is a fictionalized account of what happened during the early hours of the market crash in 2008.

Below is the trailer for the movie. There are some great actors in the movie and the movie does a good job of trying to portray the drama of the crisis without becoming overly technical. There are a few inaccuracies about the situation and what it’s like to work at an investment bank — obviously this is fiction — but the movie is entertaining nonetheless.